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Bank of Moscow keen to tap Gulf Arab region

DUBAI - Bank of Moscow, which plans to raise as much as $2 billion dollars this year, said on Tuesday it may tap liquidity in the Gulf Arab region after signing its first loan deal in the Middle East.

The bank, the fourth-biggest lender in Russia by assets, said it had signed a $220 million, 18-month loan, which was increased from $150 million after an oversubscription.

"This transaction is a new one for us," Pavel Gorbatsevich, the bank's executive vice-president, told reporters. "We intended to establish new business contacts (in the Middle East)."

The world's largest oil exporting region has been awash with liquidity as oil prices jumped six-fold in the last six years.

"Russian banking institutions and communities are hungry for funding, with the Middle East being a liquid area driven by the petro dollar," said Zaid Maleh, vice-president at RZB, one of the bank's arranging the loan.

The loan will be used for general corporate funding needs, and pays a margin of 65 basis points over London interbank offered rate (LIBOR), the bank said in a statement.

"I expect this year it (borrowing) will come to $1.5 to $2 billion," Gorbatsevich said, when asked how much the bank expected to raise in 2008.

Other banks arranging the loan were ABN AMRO, Deutsche Bank, and Emirates NBD.

Bank of Moscow, controlled by the city government of the Russian capital, has total assets of 528 billion roubles ($22.16 billion), according to the statement.

The bank's shares are up 6.56 percent at 0939 GMT.